The provisional results of Myanmar’s 2014 census, released on August 30, show that Myanmar has a population of 51.4 million, nearly 9 million fewer than the government’s long-standing estimate of 60 million.
Most analysis of the preliminary results of Myanmar’s first census in over 30 years remains focused on where the “missing” 9 million people are. Questions and hypothesis, from mass exodus during the years of political upheaval to the government overestimating of the population count, continue to emerge attempting to explain the newly discovered population deficit.
But does the discovery that Myanmar’s population stands at just over 51 million really matter? Yes, a little, but in reality it’s not a devastating blow to the country and panic and criticism of the government unwarranted. Perhaps most interesting – and troubling – is the high degree of misunderstanding as to what a lower population count means for the country’s future and economic development.
“The lower population calculation will have some real impact, but mostly it is an issue that will impact upon those too ready to accept data at face value than anything else,” Dr Sean Turnell, associate professor of economics at Australia’s Macquaire University and an expert on Myanmar’s economy, told Myanmar Business Today.
Is an increase in GDP per capita important?
“The increase in per capita income, due to the population being fewer than previous estimates, may be a figure the government can brandish around,” U Phone Myint Aung, a member of the upper house of parliament, told Myanmar Business Today.
However, this logic ignores that fact that GDP per capita is an imperfect measure, and does not account for income distribution or inequality, which plays into economic measures of consumption.
“Superficially, people will say that it will increase per capita GDP – by decreasing the denominator of the per capita GDP equation – that is aggregate GDP/population.
“However, the numerator itself is just a very imperfect estimate, and one that is not independent of the population number anyway. For instance, one of the key components of aggregate GDP, aggregate consumption, is based on a representative consumption sample, which is then extrapolated according to the estimated population number. Likewise though, some many other parts of the aggregate GDP number are just estimates, including measures of Myanmar’s significant ‘underground’ economy,” Turnell said.
Another top government official, speaking under the condition of anonymity, said that as GDP per capita increases, Myanmar may graduate from the least developed countries (LDC) status and enjoy subsequent benefits.
However, Turnell said shedding the country’s LDC status is much more complicated than increasing a simple economic figure.
“Myanmar’s status as an LDC should not change. The country was very poor a week ago, and it is very poor today.”
He said, “In any case, LDC status is a process that involves several UN agencies and the like. So, even if people shut their ideas to the country’s realities, it would take a long time for the status to change.
It is also unlikely that there would be any significant policy changes for lending organisations like the World Bank, the Asian Development Bank and the International Monetary Fund (IMF).
“Myanmar remains eligible for the IMF concessional lending to low-income countries,” Yu Ching Wong, IMF resident representative in Myanmar, told Myanmar Business Today.
“In broad terms, a member country is eligible for low-incoming financing if its annual per capita GNI is below the International Development Association (IDA) operational cut off [$1,195 in FY 2013] and they do not have capacity to access international financial markets on a durable and substantial basis,” she added.
Some believe the new population figures can be devastating to the economic development of the country. This is based on the rationale that if the population is lower, then consumption has decreased and will detract from the country’s attractiveness to foreign investors.
“A lower population can impact foreign investment because with fewer people consumption will decrease, while a larger population can contribute to rapid market development and also attract more foreign investments,” U Myint Kyaing, director general of the Department of Population under the Ministry of Immigration and Population told Myanmar Business Today.
Another top government official, speaking under the condition of anonymity, also said that a lower population will have the impact due to decreased consumption. He said, “Poverty is fuelled by the lack of consumption. Low consumption can lead to a drop in exports and foreign investment. A big population can attract investments with its spending power. China’s development is largely owed to its population.”
However, the new population figure has no impact on Myanmar’s current consumption figures – the fact is that 51.4 million people were consuming before, and those same 51.4 million people continue to consume today. Foreign investors might need to recalculate to accommodate their country strategies, but rest assured Myanmar is a piece of a larger ASEAN investment strategy for most investors – such as the ASEAN Economic Community, which is expected to start to come online in 2015.
Also, in economic terms the consumption function is far more complex than a population figure. In fact, it is well noted that poor individuals actually consume more than those in higher income categories. This is because to fulfil the basic needs of an individual they must use the majority, if not all or use debt to finance their daily living expenses – hence they consume more whereas higher income people have the luxury to save and possess disposable income.
The other side of consumption that adds layers of complexity is the consumption function takes into account an individual’s propensity to save – or on the flip side: their ability to generate disposable income. So while it is true that fewer people are consuming at a given time in Myanmar, effective policy must ask question why people consume, and what keeps them from consuming. One reason individuals do not spend is because they lack security in being able to pay for emergency expenses, such as a trip to doctor, loss of income or any other unexpected financial burden – causing them to save for a rainy day, which decreases the potential for disposable income. If the Myanmar government wants individuals to consume more, they need to create effective social safety nets that increase certainty in an individual’s overall wellbeing. This might include schemes for health and unemployment insurance. Also, developing a functioning and trusted financial system is vital to individual security.
While it is true that China’s population is a factor in its development prospects its rapid development has never been a function of domestic consumption, rather it is due to the efforts of an aggressive export-oriented growth strategy. Getting China’s population to consume continues to be a complex mix of appropriate social and economic policy combined with increased capacity in domestic governance – the same will be true for Myanmar.
If Myanmar wants to increase consumption to a level that will have real economic impact, then focus must be diverted away from population figures and placed on increasing incomes.
So what does matter?
If GDP per capita and consumption are not important factors, then what does matter in calculating the economic future of Myanmar? Productivity.
In order for productivity to increase – and hence incomes – the government should focus their efforts on directing investment to sectors that will have high impact – namely the agriculture sector, which according to the CIA’s World Fact Book employees over 70 percent of the population, and manufacturing, which is a vital sector needed to absorb the increase in city populations due to rural-urban migration.
In order to do this, more priority should be placed on the development of appropriate legislation to create a friendly business environment that attracts foreign investment from a broad base of countries – this includes making efforts to increase investment from western countries.
At the end of the day, the revelation that Myanmar’s population is nine million people fewer than estimates once provided has virtually no impact on the country’s prospects for development. If anything, the census offers more legitimacy in a country that for the past 50 years has produced virtually no statistical data.
“The results of the 2014 population and housing census, especially given the long lag since the last census was conducted in 1983, are significant in providing important information to form a more accurate snapshot of Myanmar today. Accurate and timely social-economic data are essential inputs to policymaking and monitoring development progress,” Yu Ching Wong said.
The government has the opportunity to now use this data to create effective economic and social policy that to create a multiplier effect that increases productivity, consumption and long-term economic growth.
Yu Ching Wong said: “Foreign investors will continue to be attracted by Myanmar’s long run growth potential, which remains substantial with its rich natural resources and low labour costs. Investors will generally be more attracted and confident to operate in a country with macroeconomic stability and a conducive climate for doing business.”